When you are drowning in debt, objectivity is the first thing to go. You vacillate between "I can fix this in a month" and "My life is over." I wanted to see if Artificial Intelligence could provide the cold, hard mechanical breakdown that my emotional brain couldn't process.
I created a "Red Alert" persona to test the system:
- Debt: $50,000 (Unsecured Credit Cards & Loans)
- Income: $45,000/year (Net)
- Status: 30 days late on rent.
Then, I gave it a specific command to strip away the moralizing.
"Act as a neutral financial strategist. Based on the numbers provided ($50k debt / $45k income), list 5 distinct paths forward.
Constraint: Do not lecture me on spending habits. Just list the mechanics of each option."
The Analysis: What the AI Found
The AI didn't panic. It didn't tell me to stop buying lattes. Instead, it returned a surprisingly robust menu of options, ranging from "Nuclear" to "Safe."
1. The Legal Route (Chapter 7/13)
It correctly identified that with a $45k income, the user likely passes the "Means Test" for Chapter 7 (Total Liquidation), offering a fresh start in 90 days. It also noted Chapter 13 (Repayment Plan) as the alternative if assets need protecting.
2. The Non-Profit Route (DMP)
It suggested a Debt Management Plan. This involves closing all cards and paying one monthly payment to a credit counseling agency, usually with interest rates negotiated down to 8-10%.
3. The Aggressive Route (Settlement)
It outlined "Debt Settlement"—stop paying, let accounts go to default, and negotiate a lump sum (e.g., 40 cents on the dollar). It correctly flagged the tax bomb risk (1099-C) and credit score destruction.
4. The "Strategic Austerity" Route
The Surprise: It actually suggested the "Beans and Rice" method—cutting expenses to the bone to pay off the debt in full. However, it explicitly flagged this as "High Failure Rate" given the debt-to-income ratio (debt > 100% of income). It did the math that I was afraid to do.
The Verdict
AI is a great Map Maker, but a terrible Guide.
It listed the options perfectly. It understood the mechanics of the Means Test better than most Google searches. However, it couldn't tell me which option would let me sleep at night. It couldn't weigh the shame of bankruptcy against the 5-year grind of a DMP.
Use AI to see the terrain, but do not let it drive the car. You still have to choose the destination.
Test Your Own Math
The AI flagged "Austerity" as high risk because the numbers didn't add up. Run your own numbers to see if it's even possible.
Use the Crisis Budget Worksheet